Moody’s Investors Service has assigned a Ba2 rating to the proposed senior unsecured notes to be issued by JSW Steel with a positive outlook. The rating is similar to JSW’s existing senior unsecured notes and its corporate family rating, said Moody’s.
Sajjan Jindal-promoted JSW Steel on Friday said it plans to raise up to $1 billion in dollar-denominated non-convertible bonds. Without mentioning the exact amount to be raised, the company said subject to market conditions and other considerations, the finance committee of the company will meet on April 10 to determine the pricing, tenure and other terms of the proposed dollar-denominated senior notes.
It will be conducting road-shows in Hong Kong, Singapore and London next week.
BusinessLine on Friday reported the company will be raising $500-600 million through dollar-denominated bonds.
Secured debt constituted 50 per cent of JSW’s total debt as of December, 2018, down from 71 per cent in March 2014. With the proposed bond issuance, Moody’s expects that the proportion of secured debt to total debt will fall further.
Utilisation of funds
Proceeds from the issuance will be used towards retiring some of the company’s debt and funding capital expenditure. The positive outlook also incorporates Moody’s expectation that the company will remain selective in its acquisitions.
JSW Steel has $500 million of senior unsecured notes maturing in November and an equal amount in unsecured bonds maturing in April 2022, the agency said.
“Ba2 CFR reflects JSW’s largescale and strong position in its key markets, good product and end-market diversification, and increasing focus on value-added products and retail sales,” said Kaustubh Chaubal, Vice-President, Moody’s.
Fitch assigns ‘BB’
Meanwhile, Fitch Ratings had assigned a ‘BB’ rating for the issue. The rating reflects its highly competitive conversion costs and position as one of the largest steel producers in the country.
A further increase in planned capex, following a jump in planned capex in 2018 or significant weakening of global steel industry fundamentals could weaken its financial profile, it added. However, the agency cautioned on a likely moderation in the strong margins and risks from acquisitions.